Save for an Emergency Online

Caught in the thrill of making money, the urgency to buy things and eager ness to save for bigger goals like a house and a car, the new earners typically forget the preparation for financial emergencies. Be it the sudden loss of job, medical eventuality or sudden financial support required by a family member, you will need to be ready for contingencies.

So the first thing to do, even before you start saving for smaller, short-term goals, is to build an emergency corpus. This should be equal to 3-6 months of your household expenses, and should also include any loan repayments and insurance premium obligations. This amount should be invested in such an avenue that it is easily accessible and is not subject to market fluctuations.

The best option is to put it in a short-term debt fund, liquid fund or a sweep-in bank ac count. This will ensure easy availability and higher rate of interest for your money.

Some people also prefer to use credit cards to tide over financial emergencies, but remember that these are useful only if you restrict the credit to one month. Otherwise, the cost of loan will be prohibitively high and defeat the purpose.

So, before you go on a spending spree with your pay cheque, save the amount for a rainy day.